Are you considering selling in 2015? It’s important to know which home improvement projects will bring you the most return on your investment. Visit the 2015 Cost vs Value Report (see Dallas specific info here) which compares the 36 most popular remodeling projects and the value those projects retain at resale. If you’re making updates or just thinking about selling, let’s talk about how it will affect the value of your home!
The Cost vs. Value report is an annual collaboration between Remodeling magazine and REALTOR® Magazine, which breaks down the estimated cost of various remodeling projects and the estimated return on investment for those projects by region and by city, as well as by midrange and upscale projects. In general, the 2015 report boasts that “less is more”. It’s the smaller improvements that will give you the most bang for your buck.
According to the January 2015 issue of REALTOR® Magazine:
As a general rule:
- Simpler, lower-cost projects tend to return greater value. The national average cost for a steel door replacement was $1,230, for example. That’s the least expensive project on the list, and it ranks highest on the payback scale, returning 101.8 percent nationally on average. In fact, in 43 of the 102 markets surveyed, REALTORS® said the new door would recoup more than 100 percent of its cost. Other projects expected to top 100 percent payback in multiple markets: the midrange garage door replacement, the upscale garage door replacement, the midrange wood window replacement, and the minor kitchen remodel. Notice a pattern? With the exception of the kitchen job, they’re all replacement projects. In general, replacements cost less and provide a bigger payback than remodels or additions.
- First impressions are important. The replacements that offer the greatest payback are the ones that are most obvious to buyers when they first view a house in person or online, such as new door or garage door. Siding replacement also provides great value at resale—particularly this year’s one new project, manufactured stone veneer, which is expected to recoup 92.2 percent of its cost nationally on average.
- Kitchens still offer the most remodeling bang for the buck. The only remodeling job breaking into the top 10 in terms of payback is the minor kitchen remodel with a national average cost of $19,226 and a national average payback of 79.3 percent.
Top 5 projects nationally in terms of cost recouped:
1. Entry door replacement (101.8%)
2. Manufactured stone veneer (92.2%)
3. Garage door replacement (88.5%)
4. Siding replacement, fiber cement (84.3%)
5. Garage door replacement (82.5%)
From the January 12, 2015 article in Remodeling magazine:
It’s no surprise that replacement jobs—such as door, window, and siding projects—generated a higher return than remodeling projects. That’s been the case since at least 2003. But the gap between the two categories widened by 3.8 percentage points this year even as both declined in value: Replacement projects showed an average return of 73.2% in this year’s report, just a smidgen below its 73.7% last year, while the cost-value ratio of remodeling projects sank to 60.8% in this year’s report from 65.1% last year.
When grouped by job type, siding jobs fared better than most, perhaps because of a rising perception nationwide of the value of curb appeal. Midrange vinyl siding replacement jobs were one of only five projects to rise in value, to 80.7% from 78.2%. A replacement job involving foam-backed siding slipped just half a point in value, to 77.6%, while the cost-value ratio for a fiber-cement replacement job dipped to 84.3% from 87.0%. Similarly, window jobs were no more than 2.1 points lower this year than in the 2014 report, and they ranked between ninth and 16th in overall payback.
In contrast, kitchen remodels declined as much as 6.6 percentage points, while the drop for bathroom additions and remodels was more modest, slipping 3.8 points or less.
As a general rule, the simpler and lower-cost the project, the bigger its cost-value ratio. Three of the four projects that cost less than $5,000 for a pro to do were ranked in the top five for cost recouped, and the other two were in the $5,000-to-$25,000 price range. No project costing more than $25,000 ranked better than 14th.
There is no doubt that the housing market has recovered from the meltdown that occurred just a few short years ago. However, in some states home values still have not returned to the prices we saw in 2006 and 2007. Here is a breakdown showing where current prices are in each state as compared to peak prices.
– Keeping Current Matters; December 22, 2014
Dallas-Area Home Prices Reach Record
Prices of preowned homes in the Dallas area were up 7.4 percent in the latest Standard & Poor’s/Case-Shiller Home Price Index. The gain in September from a year ago was the fourth highest in the country – significantly ahead of the 4.9 percent nationwide increase. Home price increases nationwide have slowed in recent months, but in the Dallas area, the year-over-year price increases have remained steady. Charlotte, North Carolina and Dallas continue to have price increases considerably above the national average. Dallas-area home prices are now 12 percent higher than they were before the recession and at record level in the Case-Shiller index.
- Dallas Morning News, November 26, 2014
Dallas-Area Home Appreciation in 2015 to be Twice the National Average
Get ready for 2015! “I expect the appreciation to stay in the high single digits,” said David brown in the Dallas office of housing analyst Metrostudy Inc. “Our forecast is for homes to appreciate in the 7 percent to 8 percent range in 2015.” “This is still about double the long-term average rate of increase.” It is also about double what is expected around the country.
- Dallas Morning News, November 26, 2014
Prosper: The Name Says it All
Prosper got its start as a railway whistle-stop is on the verge of a building boom that will forever change the once rural community. Homebuilders are plowing up thousands of acres of former farmland to create housing to serve growing employment centers to the south in Frisco and West Plano. And on the south edge of Prosper along U.S. Highway 380, surveyors are laying out sites for new shopping centers, office buildings and medical complexes.
“It’s been a whirlwind summer,” said Robert Winningham, who heads the Prosper Economic Development Corp. “We have 15,000 residents and are getting ready to double to 30,000. We will hit close to 500 new homes this year,” Winningham said.
With Frisco’s neighborhoods quickly filling up with new homeowners, Prosper is next in line to benefit from North Texas’ need for more housing. It’s already the second-fastest-growing community in the Dallas-Fort Worth area, according to recent census reports. The town couldn’t be in a better location, straddling Preston Road and the route of the Dallas North Tollway. Prosper stretches about 9 miles east to west and 3 miles north from U.S. 380 to the Celina city limits. “We’re like a big net catching everything that comes up from Frisco,” said Winningham, who came to Prosper about two years ago after a stint as Allen’s top economic officer. “As Frisco fills up along the tollway, that leaves us next.”
Two major residential projects in the works in Prosper will eventually add more than 15,000 residents. The 2,000-acre Windsong Ranch community on the west side of Prosper opened this summer and has seen sales of dozens of new houses. The development by Terra Verde Group will eventually have about 3,000 homes.
- Dallas Morning News, November 21, 2014
Area home foreclosures filings have dropped almost 40 percent compared to the first 6 months of 2012. Improvement in the economy and fewer layoffs is a large factor to fewer homeowners losing their home to foreclosure. Additionally, lenders are more open to modifying loans to help homeowners stay in their home. Higher home values have also enabled some homeowners to sell instead of having to negotiate a short sale or surrender to a foreclosure. This is good news to our local real estate market.
To see the full article, click here.
Home price gains in the Dallas area are less than half what they are in places like Phoenix, San Francisco and even Detroit, according to Case-Shiller. I know we want to be first, but we are first in a better way. While other parts of the country experienced “artificial inflation” of home values, we in DFW were more modest, therefore our loses were lower than the rest of the country and our rebound with be less. Moderation has kept our economy strong.
To see the full article, click here.